Auto slowdown not to put brakes on Tata Motors' capex plans

Despite a slowdown in the auto sector, Tata Motors told CNBC-TV18's Ronojoy Banerjee on Thursday that it will go ahead with its capex plans. It will be investing Rs 3,000 crore for each year over the next three years.

Despite a slowdown in the auto sector, Tata Motors told CNBC-TV18's Ronojoy Banerjee on Thursday that it will go ahead with its capex plans. It will be investing Rs 3,000 crore for each year over the next three years.

Tata Motors on Thursday said that it had no plans to cut back on its capital expenditure plans to spruce up its passenger vehicle (PV) business. The company’s passenger vehicle business head, Ranjit Yadav, told CNBC-TV18’s Ronojoy Banerjee that it was exploring options to optimally utilise its Sanand factory, which has been operating below its installed capacity.

Over the next three years, Tata Motors plans to invest about Rs 3,000 crore for each year for both commercial and passenger vehicle business. Over Rs 1,500 crore will be infused in the PV business.

More importantly, Sanand factory has been operating as low as 10 percent below capacity in some cases. Its managing director Karl Slym last month hinted on moving some of their small car production to the Sanand factory. The company is yet to take a firm decision on that.

Analysts feel that Tata Motors has no other choice than this as it has been sailing at idle capacity for too long. Meanwhile, other auto majors were mulling their capex plans. Mahindra & Mahindra (M&M) was considering evaluating their plans. Maruti Suzuki too was rethinking investing a huge amount, which will delay the commissioning its Gujarat plant.

Tata Motors’ is pinning its hopes on the festive season, but no one seems to be betting on that.